Chinese are also active in expanding
their economic presence in Pakistan's most populous province of Punjab, where
law and order situation is better than other provinces. Last month, two
different Chinese companies showed interest in to invest in finance, road and
other sectors of the provincial economy. The Punjab government and China State
Construction and Engineering Company (CSCEC) have decided to cooperate in the
Lahore Ring Road and Rawalpindi Expressway projects and a team from the Chinese
company plans to visit Lahore, the capital of Punjab next month in this regard.
Chengdu He-Hong Investment and Management Company, a Chinese firm belonging to
Sichuan province plans to set up joint venture investment bank in Lahore with an
initial investment of $30 million in collaboration with a local firm. The
analysts believe that establishment of the first-ever Chinese overseas special
economic zone (SEZ) at Kala Shah Kako, near Lahore in Punjab would go a long way
in facilitating Chinese investment in the province. Islamabad also plans to
establish separate industrial zones for Chinese investors in Lahore, Faisalabad
and other industrial estates of Punjab with maximum facilities.

A Chinese delegation of CSCEC led by
its vice-president and representative in Pakistan, Ye Wenquan on September 27
held a meeting with Punjab's chief minister Mian Muhammad Shahbaz Sharif and
agreed to cooperate in the Lahore Ring Road and Rawalpindi Expressway projects
and also committed to complete its ongoing project of software park in the
province within timeframe. Mr Wenquan assured that the company would complete
software park within the given time while a special team would visit Lahore in
the second week of October to settle details with regard to construction of the
Lahore Ring Road and Rawalpindi Expressway.

During his visit to China in November,
Punjab chief minister Shahbaz Sharif had announced that his government had
prepared a comprehensive package of incentives for Chinese companies intending
to make investments in Punjab. At the inauguration of the council of investors
and traders of Jiangsu province last November, he had declared that Chinese
entrepreneurs would get maximum facilities and protection in the province.

During his visit to China, Sharif had
signed an agreement with the CSCEC for launching the Lahore Ring Road and
Rawalpindi Expressway projects, which would not only provide better
communication facilities to the masses but would also leave a positive impact on
the provincial economy.

Last month, a visiting Chinese
delegation of Chengdu He-Hong Investment and Management Company headed by its
General Manager Hui Jinsong met with officials in Punjab government and agreed
to set up an investment bank in Punjab with an initial investment of $30 million
as a joint venture with a Pakistani firm for promotion of investment in the two
provinces. The proposed bank would also provide investment and consultancy
services to Chinese and local firms interested in investment in Punjab. The
Chinese delegation also identified education, health, agriculture, and
infrastructure sectors for investment and pledged to motivate other Chinese
companies especially from the Sichuan province to invest in Punjab, as it was
the safest place for foreign investors.

Both federal and provincial governments
have vowed to extend all possible help to establish the Chinese SEZ where nearly
two dozen Chinese companies have already committed to make investments. The said
SEZ is exclusively being established for Chinese investors and Pak-China joint
ventures. The special economic zone is being established under the Free Trade
Agreement (FTA) between Pakistan and China and all goods manufactured in this
zone have tariff-free entry into Chinese market, which would boost country's
exports. The proposed SEZ would comprise an industrial park, a science and
technology park, supply chain industry, a skill development centre, and a
research and development centre.

The Chinese investment has witnessed an
increase in the different industrial estates of Punjab over the last five years.
Former Punjab government of chief minister Chaudhary Pervez Elahi had also taken
special measures for the benefit of Chinese investors. It had established a
special cell at chief minister's House for the convenience of Chinese investors
so that hurdles in the way of investment could be removed and a favorable
atmosphere could be provided for investment.

FAISALABAD INDUSTRIAL ESTATE

Former government had allocated 500
acres of land for the establishment of industrial zones by Chinese investors in
Faisalabad industrial city (FIC) where China National Power Company has set up a
power plant. In May 2005, Punjab's former Chief Minister performed the
groundbreaking ceremony of Value Addition City (VAC) in Faisalabad, which is
being developed by Faisalabad Industrial Estate Development and Management
Company (FIEDMC) on 181 acres. Investors have shown a keen interest in VAC. The
FIEDMC is also developing FIC on 3,500 acres that will provide the
infrastructure for the private sector to build factories

The Chinese have already planned to
invest $200 million in the proposed M-III Industrial Estate in Faisalabad. The
industrial estate will spread over 4,500 acres. About 500 acres of land at M-III
Industrial Estate in Faisalabad have been allocated for the Chinese investors.
The government expects an investment of Rs 4.25 billion, which is the biggest
one in the country.

M-3 Industrial City will extend over
more than 17.7 Million square meters of prime land. It is strategically located
on Motorway M-3 South near Faisalabad City, Faisalabad International Airport,
Value Addition City, and Faisalabad dry port. The superb site location and
excellent services have drawn investors from all over the world, making M-3
Industrial City the highest profile industrial estate in South East Asia. It is
the first scientifically designed and appealing industrial estate in Pakistan,
which will provide the highest level of international infrastructure.

LAHORE SUNDAR INDUSTRIAL ESTATE

Separate industrial zone has also been
proposed for Chinese investors in Lahore Sundar Industrial Estate, which has
been established on an area of 1,600 acres of land on which an investment of
over Rs 9 billion in connection with factories and the provision of
infrastructure had been made by the end of 2006. Combined treatment plants are
being set up at the industrial estates that would play an important role in
overcoming the environmental pollution and the provision of conducive
environment for industrialization. Sundar Industrial Estate has been provided
with the state-of-the-art infrastructure.

Former Punjab government had
contributed Rs1 billion for the industrial estate where private sector is
expected to invest Rs30 billion. Pharmaceutical, chemical, pesticides, plastic,
food, beverage, and other industries have been planned to set up in the
industrial estate. The Pepsi International has invested $30 million in the
estate.